COVID-19 Impact on Georgian Economy

COVID-19 Spread dynamics and expectations of return to normalcy

  • Georgia continues to effectively manage the virus spread
  • In the major epicenters the epidemiological situation is normalizing; Restrictions are being gradually lifted in Georgia and the process is expected to continue in June
  • Domestic tourism will restart from June, while international tourism is expected to be allowed from July, under the COVID-19 safety rules

 

Growth projections

  • Growth projections worsened gradually till April and than relatively stabilized
  • In the baseline scenario, GDP is expected to decline by 4.5-5.5% in 2020. After the expected sharp drop in Q2 2020 economic activity is projected to stabilize and to recover to 4-5% growth in 2021
  • Tourism inflows is expected to drop by 65% in 2020. Activity will gradually recover from the second half of 2020 and the return to 2019 levels will take around 1.5 years

 

Other macro parameters

  • Forecasted shortfall in inflows (1.4bn USD) will be sufficiently compensated by the announced 3.1bn USD of additional financing, if managed in a timely and effective manner.
  • By the end of 2020 inflation is expected to decline to 5%
  • Further sharp depreciation of GEL is less likely; USD/GEL is projected to stabilize at around 3.1 by the end of 2020
  • After some increase recently, GEL interest rates are expected to decline

 

Anticipated effect on business sectors

  • Out of 14 key sectors, analyzed in the report, FMCG, pharmaceuticals and telecom remain relatively resilient. Along with tourism, the real estate and automotive sectors are more vulnerable
  • As compared to 2019, the hotel revenues in the USD are expected to be down by circa 85%, 35% and 0-5% in 2020, 2021 and 2022, respectively
  • Before COVID-19, there were no signs of overheating in the residential real estate sector. The apartment prices display a long-term appreciation potential. The sector turnover in the USD is expected to be down by circa 35% YoY in 2020
  • The turnover of commercial real estate is expected to decrease by circa 25% USD terms in 2020 YoY

 

 

COVID-19: Tracking the Recovery

June 5, 2020
Real estate market exhibits a slow recovery so far, currently at -70% YoY as of the week of 28th MayApartment USD price down 3.5%, rent USD price down 12%, rental yield down 0.7pp since FebruaryGrocery and phar ... learn more

COVID-19: Tracking the Recovery

June 4, 2020
Real estate market exhibits a slow recovery so far, currently at -73% YoY as of the week of 21st MayGrocery and pharmacy spending continues solid growthSpending in apparel at circa 25% of 2019 levels, helped b ... learn more